Taxpayers to own 72.5% of GM.

[Occam Bandage]

WASHINGTON — U.S. taxpayers soon may own 72.5 percent of a General Motors that's no longer a publicly traded company, according to regulatory filings by the carmaker Thursday and details released by the Obama administration. GM is expected to file for Chapter 11 bankruptcy protection by Monday, and American taxpayers are likely to own, at least for a year or more, a 100-year-old global giant that's long been synonymous with American manufacturing prowess.

"They're in the auto business today, if they were not before," said George Magliano, the director of automotive research for forecaster IHS Global Insight. "Product decisions, plant decisions, sourcing decisions are all going to be done with a view of keeping the 72 percent owner happy," Magliano said.

A GM filing with the Securities and Exchange Commission early Thursday said that the U.S. Treasury would take a 72.5 percent stake in a new GM, and administration officials confirmed that the U.S. government is likely to provide $30 billion of the $50 billion to be invested in a newly reconstituted automaker. The Treasury Department and White House, on behalf of taxpayers, will help name a new GM board of directors, and presumably will have seats at the table.

With such a large government stake in GM, the Obama administration risks the perception that actions by the new GM are being taken for political, rather than business, reasons. "Ultimately, I think what it means will be decided by how the ownership is administered," said Scott Peltz, the managing director of corporate restructuring for the consultancy RSM McGladrey.

http://www.theolympian.com/election/presidential/story/864368.html

So Chrysler went to the unions, and GM is going to the American people. I like how Obama is handling the auto industry.

[Bonhomme Richard]

1. Wow. Maybe I will get a company owners discount. n/t

[Blue_Roses]

21. lol..I was thinking the same thing!

:rofl:

[Oregone]

2. Yes, this is a solid move on the part of the administration

Im been screaming that they should do this for some time.

Next, we need the socialized company to introduce a national Green Volkswagon Project. Lets aim to get one (efficient, cheap, nice car) in every household by 5 years and stimulate production. Offer tax incentives for buyers via the IRS while you are at it.

You could fund single-payer healthcare with auto industry profits. :)

[Egalitariat]

4. Which government program do you hope they run it like?

What are some other government-run programs where there is meaningful private competition?

This is going to be interesting.

[Oregone]

5. Well, to be honest...

I hope they run it like my favorite place to buy beer, BC Liquor (http://www.bcliquorstores.com/en). Great interior design, ambiance, atmosphere, and selection, and it still rakes in *billions* competing against its private market competitors.

Yes, I'm looking at a foreign country with an established mixed-market (where I live now). They do it here ALL THE TIME, with companies called Crowned Corporations. If the US adopted that model with GM, I would be highly impressed.

The point is to not run it like a "government program". Rather, you run it in the exact same manner it has ran before (minus waste & corruption) and you have well-paid executives make the bulk of decisions. Thats right, you use CEOs. All the government does is collect profits, introduce initiatives (like green cars), and manipulate the playing field by offering unbalanced tax incentives.

[Occam Bandage]

8. The postal service is the only example I can think of in which a government-run enterprise

is in direct competition with private industries, and the postal service does a pretty good job. Regardless, GM won't be "government-run." It will be privately run, but the government will have supermajority ownership, and as such will be able to effectively set long-term goals, while still allowing GM to operate as a private company free of the bureaucratic structure of Federal agencies.

[Oregone]

20. Yeah, thats an important distinction to make...

"Government program" vs "Government owned corporation".

I just don't think there is a ton of historical precedence for Americans to draw from on this model, which is unfortunate. Its a highly effective approach in mixed market scenarios. The actually make-up in ownership rarely effects (if at all) the efficiency of the labor of the company (other than major board decisions that effect operation). Rather, they merely profit from it. In capitalism, these people that profit are private. In socialism, its rather the central authority.

[Kalyke]

14. Are they going to be forced to make it attractive, as well?

Because if they look like the current green cars, I wouldn't spend ANY money on it.

[Occam Bandage]

18. Green cars look the way they do for a reason.

Teardrops are aerodynamic.

[Oregone]

19. Tons of green cars look different

Some look just like like normal cars.

These are a big local favorite here: http://www.thesmart.ca/index.cfm?ID=4720

[pnutbutr]

23. How does a government run company

innovate and produce new products if all it's profit is being used for another government run system?

[Oregone]

24. Itll be run by its executives, not the government. Its government owned.

They could potentially vote on new initiatives and such, but they aren't going to run the company just because they own it. Do you own stock? Do you therefore run the daily operations of the company, or merely get an occasional few cents of dividends and a pitiful ability to vote? Its possible they will have power to pick out the actual executives with that much ownership, which is the extent of their ability to actually run things. But appointing CEOs goes a long way in shaping the direction.

"if all it's profit is being used for another government run system"

Profit is everything you have LEFT OVER after expenses. If there is anything left over after accomplishing everything they aim to, what other need is there for the money? If it is rather determined that the unallocated portion of gross revenue should be 100% re-invested in innovation, there will alternatively be no profit. But the model is EXACTLY the same as it is under private ownership, whereas the profits (leftovers not used) are put in private bank accounts to do NOTHING. In this scenario, if profits are generated (money that is not determined to be useful in business innovation and growth), we can at least direct to the public good.

[kentuck]

3. The new VolksChevy.

A car for the People.

[The2ndWheel]

6. Can I sell my share?

I'll even give it away.

[Romulox]

7. Since you approve so whole-heartedly, what do you make of the stark difference in treatment of AIG,

GE, and the other financials that the Obama admin has showered with so much more money while taking a more "hands off" approach?

[Occam Bandage]

9. The government also owns a majority stake in AIG, per the 2008 Bush bailout.

I'm glad that the Obama administration is taking a more hands-on approach; I think their moves on bank intervention/bailouts were much better than Bush's in Oct. 2008, and I think they're learning the importance of making sure the government can control where government money goes.

[Romulox]

11. Right. But no business plan deadline, no broken contracts, nothing comparable at AIG, GE, Citi.

And BILLIONS (trillions) more taxpayer dollars to keep their businesses "profitable" even in the face of disastrous missteps. All while keeping the corporate power structures of these companies largely intact.

I was wondering if you had any insight as to the reason for the stark disparity in treatment. :shrug:

[Occam Bandage]

12. Like I said, I'm glad the government is getting more hands-on with each bailout/intervention. nt

[Romulox]

13. I'll take that as a punt. nt

[Occam Bandage]

16. And I take ibuprofen for mild to moderate muscle soreness. nt

[gratuitous]

10. I dibs Saturday for the company jet!

Nyahahaahahaha!

Nyyyeeeeeooooowwww!

[librechik]

15. How much say do we get in management?

Cuz the products have to change--and we have to get them involved in mass transit!

poof. Not much, I'll bet.

[Occam Bandage]

17. No details yet, but we will have a say in the makeup of the new board. nt

[Oregone]

22. It depends on how much "we want".

But I bet that unfortunately "we" won't want much.

[pnutbutr]

25. whoopee

I own part of fail company that as part of the restructuring plan is going to outsource over 90% of production outside of the US. Nevermind the fact that we have already given fail company $19 billion in bailout and it is still declaring bankruptcy.